U.S. Marine Corps

Apparently, wealthy investors have been whispering about this. Lately, it’s become more of a chatter. Impact investments – intended to solve major social issues while providing a reasonable financial return – are an emerging trend for investors who wouldn’t mind seeing their money work for someone (or something) other than themselves.

Americans donate $300 billion to charities each year, but put nearly $41 trillion into the stock market. Financial managers are seeing an opportunity to combine the two: a way to gain returns while making a social impact.


After selling his wealth management company, Ron Cordes founded the Cordes Family Foundation. He took a quarter of the foundation’s investment portfolio and invested it into small business loans for entrepreneurs in poor and developing regions. Collaborating with the Rockefeller and Calvert Foundations, Cordes formed a product to direct investors toward the top performing organizations supporting social causes.
Ron Cordes: The Cordes Family Foundation

Impact investments are unlike Socially Responsible Investments, which make up more than 8 percent of the marketplace and are screened to eliminate securities that do not correlate with the investor’s environmental and social standards, beliefs, and practices. Instead, impact investing places assets with companies that are dedicated to combating issues such as poverty, global warming, clean water, homelessness, and education. It requires a bigger commitment than charitable giving, but it also yields a financial return – so it doesn’t classify as philanthropy.

“There is a risk in investing in communities that have to start from the bottom-up; but those dollars will likely have never had a greater purpose and value.”

Curt Carnemark / World Bank

The trend for impact investing is a slow but steady journey; J.P. Morgan estimates it to be a $400 billion to $1 trillion dollar industry in the next decade. Private equity and debt funds require a minimum $50,000 investment so, up to this point, the option has been mostly relegated to high net-worth individuals. There is a risk in investing in communities that have to start from the bottom-up; but those dollars will likely have never had a greater purpose and value. 


It does open the conversation of how socially responsible we are with our investments and savings on a daily basis. Also, it will be interesting to see how Gen-X and Gen-Y’ers respond to impact investing, being among the most socially-conscious generations to encounter the financial world. The idea of putting your savings in someone else’s hands seems futile during a recession, but the result could be cleaner, healthier communities that help each other become richer. That’s not a bad existence to look forward to, but time will show how close it is to being realistic.